SECURITIES AND EXCHANGE COMMISSION
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CAPTEC NET LEASE REALTY, INC.
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(Name of Registrant as Specified in Its Charter)
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[CAPTEC GRAPHIC]
November 6, 2001
Dear Fellow Captec Stockholder:
We are less than two weeks away from the November 19th Special Meeting of
Stockholders to vote on the merger of Captec and Commercial Net Lease Realty,
Inc. (CNLR). We are more excited than ever about the creation of a combined
CNLR-Captec.
For Captec's stockholders, the merger with CNLR will provide immediate cash
consideration and the opportunity to participate in the upside potential of a
continued investment in a combined CNLR-Captec. We believe this transaction is
in the best interests of Captec and all of its stockholders. But don't just
take our word for it. Read what the experts are saying about Captec and CNLR...
INSTITUTIONAL SHAREHOLDER SERVICES RECOMMENDS THAT
CAPTEC STOCKHOLDERS VOTE FOR THE CNLR MERGER
On November 2, 2001, Institutional Shareholder Services (ISS) recommended that
Captec stockholders vote in favor of Captec's proposed merger with CNLR. ISS
is widely recognized as the nation's leading independent proxy advisory firm.
Its recommendations are relied upon by hundreds of major institutional
investment firms, mutual funds, and other fiduciaries throughout the country.
In reaching its recommendation, ISS held separate meetings with both Captec
management and Phillip Goldstein, a dissident stockholder who opposes the
merger. In its report, ISS summarized its findings as follows:
"... ISS believes that the [Captec] board took the necessary steps in
conducting a thorough and fair process to sell Captec, including its
non-real estate assets. Furthermore, the CNLR merger appears to be a sound
transaction for shareholders and maximizes shareholder value. The merger
warrants shareholder support."*
ISS supported Captec's conclusion that the merger with CNLR, together with the
asset purchase agreement, are in the best interests of Captec and all of its
stockholders. ISS further stated that, "no alternative has emerged that is
equal in value to the merger." In addition, after considering Mr. Goldstein's
recommendation for pursuing a liquidating trust, ISS dismissed the idea and
noted that, "it may take several years before shareholders realize any
potential value from those assets... As an alternative, the merger offers
shareholders immediate cash value on those assets."
- 2 -
We are extremely pleased that ISS has recommended that Captec stockholders
vote FOR the merger with CNLR. The positive recommendation by this
well-respected advisory firm provides further support for this value enhancing
transaction. We look forward to completing this merger and enabling all
stockholders to realize the benefits inherent in this combination.
We cannot create the combined CNLR-Captec without your vote. Please vote today
FOR the merger of Captec and CNLR on the WHITE proxy card. Remember, failure to
vote has the same effect as voting against the merger. We urge you NOT to return
Mr. Goldsteins's green proxy card. If you have already returned a Goldstein
proxy, you can still change your vote by signing, dating and returning a WHITE
proxy card now. Only the latest-dated proxy will count. For more information
about how to vote, please call Captec's proxy solicitor:
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GRORGESON SHAREHOLDER COMMUNICATIONS
TOLL FREE
1-800-223-2064
OUTSIDE THE U.S.
1-212-440-9800
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On behalf of Captec's Board of Directors,
/s/ Edward G. Ptaszek
Edward G. Ptaszek
Secretary
Captec Net Lease Realty, Inc.
*Permission to use quotation was neither sought nor obtained.